The Indian electrical equipment industry recorded a decline of 2.4 per cent in Q1 of FY13, according to statistics released by Indian Electrical & Electronics Manufacturers Association (IEEMA). The industry had recorded a 13.8 per cent growth in Q1 of FY12, while the growth in the immediately preceding quarter (Q4 of FY12) was 14.1 per cent.

In the period under study the transformer industry slipped to -7.6 per cent against the growth of 6.6 per cent in Q1 of FY12. Other important segments like capacitors and cables also recorded declining production (see table).

Commenting on the results, Ramesh Chandak, President, IEEMA said "In recent years, a surge in imports of cheap and inferior quality electrical equipment from abroad is significantly impacting the Indian electrical equipment industry with under-utilization of recently enhanced capacities across several products. The commercial viability of the industry is getting dented and can have severe long term consequences, leading to a situation of unnecessary dependence on imports at the cost of domestic manufacturing.''

While the Indian electrical equipment industry has recorded a negative growth, imports have increased by 100 per cent for insulators, motors and generators. According to IEEMA, Indian electrical equipment manufacturers are facing a tough competition in the domestic market from foreign suppliers.

GROWTH IN Q1*
	FY12	FY13
Transformers	6.6	-7.6
Capacitors	20.9	-24.8
Cables	44.6	-12.9
Motors	9.6	-2.6
Switchgear	2.5	2.4
Overall	13.8	-2.4
*Y-o-Y in per cent

Absence of a level playing field for the domestic industry to compete with imported electrical equipment, especially from China, is a clear and present threat. While, Indian imports of electrical equipment have grown in the past five years at an annual rate of 28.3 per cent, China's share in Indian imports of electrical equipment has dramatically increased in the last few years and now it stands at around 44 per cent of the total from around 15 per cent in 2005-06. Imports from China have grown at an astounding annual rate of 59 per cent over the past five years.

INDUSTRY NEEDS ENCOURAGEMENT, NOT SOPS
Discussing the industry debacle in an exclusive interaction with Electrical Monitor, Vishal Gakhar, Director-General, IEEMA, explained that even as the 2.4 per cent decline in the electrical equipment in Q1 of FY13 was astonishing, it was not altogether unexpected. This performance by the electrical equipment industry is a manifestation of the general slowdown in the infrastructure sector. "Several infrastructure projects are on hold for policy-related and other issues. The power and the electrical equipment industry have faced the brunt of it," Gakhar noted.

When asked about his outlook for the remaining part of FY13, Gakhar admitted that such downturns cannot be reversed quickly and they are not mere fluctuations. "It is not a fluctuating phenomenon, but represents a trend," the IEEMA official explained. All the same, Gakhar was confident that there would be improvement but with concerted efforts between stakeholders, policy makers and regulators. "There is need to give infrastructure status to the electrical equipment industry and all stakeholders should address the true bottlenecks in the industry," Gakhar said as a long-term measure to bring back the industry on track.

Speaking on the micro-level performance of the industry, the IEEMA top official observed that the insulator industry has been severely impacted. "Imports have stormed the market because of the absence of level-playing field between domestic producers and international suppliers."

"The industry needs much encouragement at this point in time," he asserted. Unlike in the past where industry demands generally consisted of sops, this time around what the industry needs is a level playing field. "For instance, participation of international suppliers in domestically-funded projects should be limited, as in the case of telecom. Domestic manufacturers, with tightened quality control will ensure that only good quality and reliable equipment comes in the country," Gakhar noted.

Reiterating IEEMA's stand, Gakhar felt that there should be mandatory requirement for foreign suppliers to set up a manufacturing facility in India. "These measures will go a long way in making the electrical equipment industry becoming competitive, not just domestically but also globally," Gakhar concluded.